Information Today
Volume 19, Issue 6 — June 2002
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• Poynder on Point •
The Big Lie
Is vendor sponsorship a win-win arrangement or is it having a corrosive effect on the industry?
By Richard Poynder

[Editor's Note: This month marks the debut of Richard Poynder's new bimonthly column, which will tackle many of the issues affecting the information industry.]

While attending an industry meeting in New Orleans 15 years ago, seasoned patent searcher Stu Kaback was approached by two colleagues. "Wouldn't it be great," they said, "if we could occasionally get together and talk about what we need without any vendors around?"

Initially skeptical (Kaback thought, "Gee, with so many meetings to attend, do we really need another one?"), he later came around to the idea, and the Patent Information Users Group (PIUG) was born.

PIUG's raison d'être was to act as an advocacy group for patent searchers. "Our meetings would involve sitting down, asking what problems we faced as searchers, and then deciding what we have to yell at this vendor about, and what we have to yell at that vendor about," explains Kaback, currently a director on the PIUG board.

While the early meetings were little more than a few colleagues getting together in borrowed offices, PIUG benefited from havinga core group of active members and a rising tide of interest in intellectual property. Today, PIUG membership stands at around 500, its mailing list boasts an international audience of 1,400, and the PIUG annual conference has become the patent information industry event.

In recent months, however, concern has grown that PIUG may have lost sight of its original purpose. This concern raises questions not just about the future direction of PIUG, but of the ability of any user group to retain its independence if it comes to rely on sponsorship from vendors.

Matters came to a head in March, when Alan Engel, the president of small information vendor Paterra, posted a bitter message to the mailing list announcing his intention of pulling out of the PIUG 2002 Annual Conference. Complaining that a speaker from Derwent Information had been given preferential treatment, he said, "The program chair has justified this by the large amount of money that Derwent is putting into PIUG 2002."

While hardly on a par with the sponsorship scandal that rocked the 2002 Winter Olympics, the incident has underlined the difficulties confronting industry user groups.With limited resources and rising organizational costs, it can be very difficult to survive without the financial support of the very companies that such groups are founded to "yell at"—leading to inevitable conflicts of interest.

The extent of the financial constraints faced by user groups should not be underestimated. Earlier this year the U.K.'s Institute of Information Scientists (IIS) was compelled to merge with the Library Association, forming the Chartered Institute of Library and Information Professionals (CILIP). The less fortunate International Federation for Information and Documentation (FID) found the financial exigencies too onerous and has had to cease operating altogether.

A Regrettable Misunderstanding
But what exactly took place between Paterra, Derwent, and PIUG to cause such bitterness, and what relevance—if any—does it have for the wider information industry?

Alas, we know no more than Engel's original posting. Engel himself refuses to discuss the matter with Information Today, PIUG will say no more than that it was a regrettable misunderstanding, and—not surprisingly—Derwent also prefers not to comment. "I have no intention of responding to Mr. Engel's claims, which I believe are directed at PIUG rather than Derwent," says Peter McKay, Derwent's managing director.

For lay members of PIUG, however, Engel's posting set off alarm bells. It was not so much his allegations, as the way that the PIUG board responded to them. Immediately following Engel's posting, one of PIUG's directors-at-large e-mailed the following injunction to other board members: "DO NOT respond to Alan Engle's [sic] posting on the e-mail list.... Let it die a quiet death. He wants attention. DO NOT GIVE IT TO HIM. Most people will never read the message...."

To the chagrin of PIUG, the message was mistakenly copied to the mailing list, thereby flagging—rather than downplaying—Engel's complaint and sparking a flurry of replies pointing out that the board's attitude directly contradicted everything that PIUG stood for. After all, commented one member, speaking to me later on condition of anonymity, "If Alan wants to put a complaint on the list—which I thought was an open forum—then the matter should be open and discussed."

"I was appalled," commented another, also requesting anonymity. "First, I don't like anybody telling me what to do. Second, I thought there was some substance to Alan's complaint, even if I wouldn't personally handle it the same way."

The reaction of the PIUG board, then, only served to reinforce Engel's allegation, creating a "no smoke without fire" impression. It also fed the suspicion held by some vendors that the PIUG board is prone to cronyism. "While PIUG membership is quite broad—with people from all areas of the intellectual property sector—most of those on the board come from the petrochemical, chemical, and pharmaceutical sectors. As a result, a small group of vendors specializing in those areas get away with a lot more than the rest of us," complains an employee from one of the online hosts.

For others it was final proof that—rather than remaining a champion for the user—PIUG had succumbed to the same monopolistic tendencies frequently ascribed to the larger vendors.

It turns out, for instance, that Paterra is not the only small vendor to have crossed swords with PIUG. An employee of one—speaking on condition of anonymity—recounts his anger at the proprietorial reaction of the PIUG board when his company tried to organize a fringe workshop at the recent PIUG conference in Berkeley, California. "The message I get was that they own Berkeley for that week."

Is this the price user groups can expect to pay for seeking vendor sponsorship to support their activities? Certainly if PIUG had held to its initial intention of barring vendors from its meetings, such controversy would have been avoided.

Advocacy to Education
So how and why did PIUG mutate from advocacy group to sponsored conference organizer? And what lessons, if any, does it hold for other user groups?

Over time, explains Kaback, a feeling developed that, in addition to advocacy, PIUG should play an educational role for members. While at first this consisted of organizing talks and presentations by independent patent experts and specialists, PIUG found itself coming under increasing pressure from vendors—who saw considerable advantage in being able to pitch to what was clearly an increasingly valuable audience. "They said, 'Can we become members; can we come to your meetings; can we get more involved?'" explains Kaback. "So we talked about it, and we decided that we had something to learn from the vendors, and we wanted to have two-way communication with them."

At the same time, PIUG was discovering that organizing meetings is an expensive business. While its 1997 meeting cost just $3,000, by 2001 this had escalated to $76,000. Moreover, Kaback says, when you add in room guarantees you end up with a meeting budget of some $200,000. For an organization with an annual subscription income of around $15,000, this meant PIUG was having to punch considerably above its weight. "Think of that with a volunteer organization that has no corporate backing," says Kaback.

For PIUG, then, sponsorship soon became an essential ingredient for survival. Today vendors can sponsor its annual conference in a variety of ways—contributing anything from $1,000 to put a product table in the "demo room," to $9,000 to provide a free lunch for delegates (for which in return they receive a free meeting room, a table in the exhibits room, a speaker slot, and a smorgasbord of "mentions").

Nonetheless, insists Kaback, PIUG cuts no special deals with sponsors. "Sponsorship gets the sponsor an acknowledgement, and that is usually associated with some airtime, but it doesn't purchase any favoritism. We have been really very, very careful about that."

Questions of Funding
and Independence
So should we be concerned about vendor sponsorship? Many insist not, arguing that it is in fact a truly win-win arrangement. Dismissing the Engel affair as a "one-off and very specific case," for instance, the head of external relations at CILIP, Tim Owen, argues, "Vendor sponsorship is fine as long as the terms are carefully negotiated, clear, and transparent, and benefit both parties."

MicroPatent, which is a regular sponsor of the PIUG conference, takes the same view. "Our sponsorship does not change or influence the objectives of the annual meeting or the goals of the group," insists Laura Gaze, director of marketing at MicroPatent. "Rather, it allows everyone to better enjoy the meeting."

And after all, most sponsorship in the industry amounts to little more than the occasional free meal or branded pen. Nonetheless, even such small gifts can influence people, or why else would vendors donate them? What we cannot say for sure is the extent of this influence, or whether it is having a corrosive effect on the industry.

Certainly the Engel affair has left some PIUG members wondering. Whatever the reality of the allegations, it has drawn attention to the inevitable conflict of interest flowing from accepting money from organizations that you are—in effect—supposedto be policing. Instead of yelling at vendors, PIUG is now providing them with another sales channel. As one of the PIUG members I spoke to puts it: "It raises questions about funding and how independent PIUG can be from large sponsors."

As a former executive director of the European Association of Information Services (EUSIDIC), Barry Mahon has experienced vendor sponsorship in all its guises. While agreeing that it can indeed benefit both users and vendors, he points out that it also inevitably dilutes criticism. At the very least, he says, it means that sometimes "chairpeople refuse to allow 'nasty' questions to speakers from sponsoring organizations."

Minor censorship like this is hardly a serious crime. Nor is it always a bad thing where inappropriate criticism might run counter to the objectives of a particular meeting. But for any organization founded on the principle of user advocacy, it must surely raise suspicions that the tail is starting to wag the dog.

For some, however, vendor sponsorship poses a far greater threat. The fear is that it could stifle innovation and thus retard the development of the industry, since the increasing pressure for airtime at events such as those organized by PIUG can cause smaller vendors to be pushed aside by the (almost inevitably larger and wealthier) sponsors.

Referring to the growing dominance of the large vendors at the PIUG conference, for instance, one of the members I spoke to commented, "I think what is being squeezed on the program are presentations from smaller vendors, and maybe topics that are not so mainline [but that] may represent emerging topics and technologies."

After all, she adds: "It could be argued that there are other venues for delegates to learn what's new at the larger vendors, because they have larger marketing and publicity budgets.... The question is whether delegates also want to be kept up-to-date on what's new and innovative [from the] small vendors.... PIUG may be doing its members a disservice by not giving them ample airtime."

This is a point also made by Engel in his message: "I have come to the inescapable conclusion," he said, "that there is no room for a small, innovative company at PIUG 2002."

Contradictory Objectives
What, then, is the way forward? In Europe an alternative model for enabling user/vendor interaction is the creation of cross-industry organizations where membership is open to both users and vendors. This is the model adopted, for instance, by the City Information Group (CiG; formerly a special interest group of the IIS, now an independent company) and by EUSIDIC.

"This unique position," says EUSIDIC chair Johan van Halm, "prevents us from mixing up the interests of both parties. We stimulate both interests and are a platform for information exchange between both parties, which need each other."

But this, surely, is just another way of propagating the big lie at the heart of most discussions about vendor sponsorship: that the interests of vendors and customers are, or could ever be, commensurate. As individual consumers we all know this to be nonsense, so why does the information industry seek to pretend otherwise?

The reality is that the often unacknowledged objective of vendors is to maximize sales at the maximum possible cost to the user. Almost invariably, the primary objective of users is the exact opposite: to minimize purchases at the lowest possible price. These are two entirely contradictory objectives.

User members of CiG, for example, are quite clear that the organization's focus has little to do with user advocacy. As an information professional working in a City of London investment bank said to me recently: "It is very difficult to find an umbrella body able to bat for customers as a group. The CiG certainly doesn't since it is composed of both vendors and information users. As such it simply can't reflect the interests of the information user alone."

Nor, surely, can user-only advocacy groups once they have become financially dependent on vendor sponsorship. Moreover, as the industry continues to consolidate, so the balance of power in the sponsorship relationship will shift ever further toward the vendor and away from the user.

Explains Mahon: "When there were a number of producers/suppliers/vendors, even if some were bigger than others, the situation was reasonably equitable. As the ownership of information sources has concentrated, so the big two/three have tended to pick and choose their sponsorship."

In other words, as the pool of sponsoring organizations gets smaller, the tendency for vendor-sponsored user groups to yell at vendors will wither away and die, and the products and services on offer will deteriorate in quality.

Alternative Funding
The good news is that the Engel affair has provided food for thought. In its post-Engel newsletter, PIUG sets out the "general principles" by which the organization handles sponsorship and allocates speaker slots at its meetings. Explains PIUG director-at-large Edlyn Simons (not the director who responded to Engel's posting): "We've been trying to follow the principles listed in the newsletter, but from some individual perspectives, we acknowledge that we may not have always succeeded."

PIUG has also begun to seek alternative (non-vendor) sources of sponsorship. In fact, one of the sponsors of this year's annual conference was biotech company Genentech. "Genentech has provided sponsorship not because it is a vendor, but because its employees are members and because they believe it is a worthy organization to support,"says Kaback. "We are going to try to increase that kind of sponsorship."

We must hope that PIUG is successful in decoupling sponsorship from salesmanship, since—whatever the truth of the allegations—the harsh reality underlined by the Engel affair is that the acceptance of vendor sponsorship by user groups is fraught with potential controversy and eventually counter to the interests of the user.

Earlier this year Kaback posted a series of increasingly frustrated messages on the PIUG mailing list complaining about the quality of patent records. He ended with the question, "Am I the only individual who is upset by this sort of thing?"

We should not doubt that other users also get upset by poor-quality products and services. What we should doubt is the proposition that vendor sponsorship and user advocacy can ever be comfortable bedfellows.

Is there an issue of relevance to the information industry that you would like examined, a story you feel should be told, or an industry player you would like to see interviewed? Please send your suggestions to Richard Poynder at the e-mail address below.

Richard Poynder is a U.K.-based freelance journalist who specializes in intellectual property and the information industry. He writes for a number of information publications, and contributes regularly to the London Financial Times. His e-mail address is

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